The paper, co-authored by World Economic Forum (WEF) researchers and Chainlink experts recommends a framework that can provide a secure gateway for legacy systems to interact with all blockchain environments
Chainlink, the most widely used decentralised oracle network, collaborated with the WEF on a whitepaper that is aimed at proposing industry oracle standards for connecting blockchains and legacy systems. The 40-page report, released yesterday, explained that blockchain and smart contracts can unlock the hidden values of legacy digital systems.
The paper, “Bridging the Governance Gap: Interoperability for Blockchain and Legacy Systems”, proposes an open-source framework to achieve interoperability between legacy systems and Distributed Ledger Technology (DLT) through the use of decentralised oracle networks–but only for specific use cases that are suitable for blockchain.
Organisations have recognised the importance of connecting blockchain systems to legacy infrastructure and data sources, explained Sheila Warren, Head of Data, Blockchain and Digital Assets, and Member of the Executive Committee at the World Economic Forum.
“This framework is an important step in providing concrete guidance to ensure that stakeholders can effectively evaluate opportunities, challenges, and potential actions to facilitate much-needed interoperability that can help unlock the benefits of distributed ledger technologies”, she added.
Chainlink Co-founder Sergey Nazarov explained that “the paper highlights some of the key considerations for both financial institutions and government IT initiatives, demonstrating their ability to become blockchain-enabled…”
The white paper was reviewed by industry leaders from across the blockchain ecosystem and representatives from the World Economic Forum’s Centre for the Fourth Industrial Revolution.
It provides several guidelines to create holistic industry standards for connecting blockchain and legacy systems and specifically talks about the significance of using crypto assets to provide crypto-economic guarantees.
Though the paper promotes highly technical and abstract solutions for improving interoperability between blockchains and legacy systems, it demonstrates practical application in the form of India’s Crop Insurance Scheme, a 2016 policy aimed at providing insurance coverage and financial support to farmers affected by natural disasters.
Agencies involved in implementing the scheme reported various issues ranging from transparency and accountability to corruption and information security. The white paper focuses on highlighting blockchain-based smart contracts and oracle systems can act as an efficient solution to the issues.
“The crop insurance program serves as an apt case to highlight the current deficiencies most legacy systems face when dealing with multiparty business processes”, the paper states. It further explains that blockchain‑based architecture becomes imperative for any organisation looking to automate business processes in a decentralised manner.